Chapter 11 Recovery Calculator: How Much Will Creditors Actually Get?
Can your business survive Chapter 11 bankruptcy?
⚖️ Chapter 11 Recovery Calculator
Ch.11 vs Ch.7 Waterfall · DSCR Feasibility · Creditor Recovery · Scenario Analysis
Absolute priority rule applied. Results update in real time as you change inputs.
📋 Creditor Claims
📈 Business Projections
Results are estimates only and do not constitute financial, tax, or legal advice. Consult a qualified professional before making financial decisions.
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Chapter 11 bankruptcy reorganisation is fundamentally a negotiation about how much different classes of creditors will recover — and whether the reorganised business can feasibly generate the cash flows to fund the proposed repayment plan. Unlike Chapter 7 which liquidates everything and distributes proceeds, Chapter 11 keeps the business operating and asks creditors to accept a repayment plan that may pay them over 3-7 years at a fraction of what they are owed. The recovery rate varies dramatically by creditor class. Secured creditors — those with collateral backing their claims — typically recover 70-100% in reorganisation, while unsecured creditors frequently recover 10-50 cents on the dollar, and equity holders often recover nothing. The absolute priority rule governs the waterfall: each senior class must be paid in full (or consent to less) before a junior class receives anything. This calculator models a Chapter 11 reorganisation across the full creditor waterfall. It shows estimated recovery by class, compares reorganisation recovery against Chapter 7 liquidation recovery to test whether the plan meets the best-interest-of-creditors test, and models whether the reorganised business's projected EBITDA can service the proposed plan payments. It gives both business owners evaluating Chapter 11 and creditors evaluating whether to support a plan the quantitative framework to make informed decisions. Updated 2026-03-06 · Samir Messaoudi.
- →You are considering Chapter 11 and want to model what creditors would recover under a reorganisation plan
- →You are a creditor evaluating a proposed Chapter 11 plan and want to compare recovery to Chapter 7 liquidation
- →You want to test whether your projected business cash flows can feasibly fund a repayment plan
- →You are in a Chapter 11 negotiation and want to model different plan structures for different creditor classes
- →You want to understand the absolute priority rule and creditor waterfall before entering reorganisation
- →You are evaluating whether to file Chapter 7 liquidation or Chapter 11 reorganisation for a distressed business
TechMakers LLC has $4.2M in total claims. Secured lender: $1.8M with collateral value $1.6M. Trade creditors: $1.4M unsecured. Subordinated debt: $600K. Equity: $400K deficit. Chapter 7 liquidation produces $1.9M total proceeds. Chapter 11 reorganisation plan: $3.1M over 5 years from projected $620K annual EBITDA. Secured creditor recovery: 89% reorganisation versus 81% liquidation. Unsecured: 43% versus 7%. Equity: 0% both paths. Plan DSCR: 1.24x — feasible.
- ✕Assuming unsecured creditor recovery rates in Chapter 11 are similar to secured — unsecured typically recovers 10-50 cents on the dollar
- ✕Forgetting administrative and professional fees at the top of the waterfall — these consume 5-15% of assets before any creditor is paid
- ✕Not testing whether the plan meets the best-interest test for each creditor class individually
- ✕Using going-concern value rather than reorganisation value for the plan feasibility calculation
- ✕Underestimating the time value of deferred plan payments — 100% recovery over 7 years at no interest is worth far less than 100% today
What is the difference between Chapter 11 and Chapter 7 for a business?
Chapter 7 is liquidation: the business ceases operations, a trustee sells all assets, and proceeds are distributed to creditors in priority order. The business entity is dissolved. Chapter 11 is reorganisation: the business continues operating as a debtor in possession, proposes a plan to repay creditors over time, and if the plan is confirmed by the court, the business emerges as a going concern. Chapter 11 is viable when the business has more value as an ongoing operation than its liquidation value.
What is the absolute priority rule?
The absolute priority rule requires that each senior class of creditors must be paid in full (or consent to less) before any junior class receives any distribution. The priority order is: (1) administrative expenses and professional fees, (2) priority unsecured claims such as taxes and employee wages, (3) secured creditors up to collateral value, (4) general unsecured creditors, (5) subordinated debt, (6) equity holders. In most reorganisations, general unsecured creditors receive partial recovery and equity typically receives nothing.
What is the best-interest-of-creditors test?
For a Chapter 11 plan to be confirmed, each creditor who votes against the plan must receive at least as much under the plan as they would in a Chapter 7 liquidation. This is why calculating Chapter 7 liquidation recovery is essential to Chapter 11 planning — the liquidation value sets the floor that the reorganisation plan must exceed for each objecting creditor. This calculator computes both and compares them directly.
What DSCR does a Chapter 11 plan need to be confirmed?
The plan must demonstrate feasibility — the reorganised business must generate sufficient cash flows to make plan payments without likely liquidation or need for further reorganisation. Courts typically look for Debt Service Coverage Ratios of 1.15x or higher on plan payments. A DSCR below 1.0x means projected cash flows are insufficient to cover plan obligations — the plan is not feasible and will likely be denied confirmation.
How long does a Chapter 11 reorganisation take?
Most small business Chapter 11 cases qualifying for Subchapter V treatment are resolved in 3-6 months with a 3-5 year repayment plan. Standard Chapter 11 cases for larger businesses typically take 12-24 months before plan confirmation, with plan repayments extending 3-7 years. Pre-packaged Chapter 11 plans negotiated with creditors before filing can be confirmed in 30-60 days. Professional fees are substantial — typically $100,000-$500,000 for small businesses.